The Commercial Inspector Blog Posts

Small Suburban Companies Filling Void Left in City

SMALL SUBURBAN COMPANIES FILLING VOID LEFT IN CITY
 August 18, 2021 |  CRE News, Management, Investment |  real estate trends, save money, building renovation, commercial real estate tenants, office space

After many companies were forced to close their doors last year, the challenge for commercial property owners has been attracting businesses back. The combination of bankruptcy and many workers going remote has left a sort of Swiss cheese-esque gap in larger cities’ commercial real estate. In an effort to rebound, property owners have been trying to market their buildings to smaller brands that were cut off by bigger brands in the past. This has led to a migration of suburban companies from the outskirts towards the center of prime real estate.

Big Names Begin the Move
The idea of leaving the suburbs for the skyscrapers of nearby metros was first ignited by big names like McDonald’s and General Electric. While the attraction of having room to grow in suburban locations drove companies to the suburbs, they found it hard to bring workers with them. Transportation for employees from the city to the suburbs wasn’t always easy. Plus, housing tended to be scarcer as opposed to downtown areas that yielded more options. Being in the city next to major attractions and nightlife was another draw for young professionals. These considerations helped spur the movement for most businesses to relocate back to the heart of the city.

2020 Leaves Holes
It was difficult for workplaces to adjust to the new normal in 2020, and some still haven’t fully recovered. Offices went from cubicles to home offices, while others shut down for good. As the vaccine rollout has helped open things back up, 65-75 percent of workers say they still prefer to work from home full time. Property owners are left scrambling to find ways to draw renters back. Instead of solely focusing on big organizations, managers are also looking to start accommodating smaller companies that have been boxed out of expanding into the city.

Cut Rates
One way landlords are marketing towards suburban businesses is by offering reduced leasing rates. Discounted or even free rent for a period of time can start a buzz around your property from those looking to branch out. Especially in a time when profits for most businesses were down, being able to save money where possible makes all the difference. Office space is usually more expensive in a competitive city market, so offering a deal to potential clients gives them a taste of what you can do. This is a great opportunity to show them why signing with you is worth the money!

Fitting Needs
Remodeling a space can also eat into budgets and delay the moving process. Some property managers are finding that offering to foot part of the bill is getting traction with renters. Not only does it help land you a deal, but it shows renters that you care about them and are willing to work with them. The rise of coworking and open-concept floor plans has left the days of cubicles behind. Spending a bit upfront to create the perfect workspace with your renter can pay off later.

Flexible Leasing
Negotiating a leasing term can be tricky. You don’t want to go too short and risk not making your money back, but locking in an unhappy client long term creates a hassle for both parties. Writing up an agreement that protects you both gives a way out in case it’s needed. Getting roped into a contract that’s too long can worry leasees if they need to move quickly. Downsizing, slow business, and adjusting needs are all reasons that a company could cut from their lease early, and you don’t want to be left scrambling for a new tenant. A flexible lease will benefit you and your renters, and again, it shows how willing you are to collaborate so that everyone wins.

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